DBJ Amazon HQ2 Article Features YP Research Director Steve Triolet

Two schools of thought prevail on the impact of Amazon’s second headquarters search on other major corporate relocations and expansions scouting Dallas-Fort Worth and the rest of the United States.

One school posits that Dallas and many of the other 19 metro areas still in the running for Amazon’s HQ2 are experiencing a “halo effect,” or an attraction from other businesses due to the hype surrounding the Seattle e-commerce juggernaut’s interest. If a city is good enough for Amazon’s consideration, this line of reasoning goes, it’s good enough for ours.

The other school counters that companies considering HQ2 finalist cities are hitting the slow-mo or pause button on their own searches until after Amazon names its final HQ2 resting place. Cities on Amazon’s list have the equivalent of devil’s horns that scare away companies worried that the 50,000-job project will soak up available IT talent, drive up salaries and cause housing costs to soar to levels their own employees couldn’t afford.

With the economy going strong, site selection activity has been strong across the U.S. for high-end corporate campus projects, White said. In addition to Amazon, some of the names on the list include Apple, Snapchat, JPMorgan Chase, Google, Infosys, State Farm, Liberty Mutual and more.

The quest for more labor is the top factor behind most of the largest site selection searches, White said. Most companies have gotten so big at their headquarters location that they are tapping out their existing labor markets, he said.

Apple and Amazon, for example, are both searching for new labor markets after outgrowing their headquarters labor markets. When leaving high cost labor markets like San Francisco and Seattle, these companies often can reduce their labor costs by 20 to 30 percent, White said.

“The impact of these mega-deals on your site selection decisions is critical,” White wrote in a recent blog to his company’s clients. “Most of these projects are branded employers paying premium wages, so they can be an employer of choice. Just think of the impact of Amazon landing in your city as they ramp up to 50,000 employees. Your employee attrition and labor cost for quality talent are going to skyrocket.”

A spokesman for the Dallas Regional Chamber, which coordinated the DFW market’s combined pitch for HQ2, said chamber executives haven’t noticed an increase or decrease in interest in DFW since being placed on Amazon’s list.

“The ‘halo’ the DFW Region enjoys comes from the fact that this market continues to be one of the most dynamic economies in the country and a homing beacon for companies and jobs,” the chamber’s Darren Grubb wrote in response to questions from the Dallas Business Journal. “Since 2010, more than 125 companies have relocated here, hundreds of other local businesses have grown and expanded, and more than 100,000 new jobs are created every year.”

Steve Triolet, research director for Dallas-based commercial real estate firm Younger Partners, said the company hasn’t seen evidence of a halo or horns effect in regard to relocations to North Texas.

With few exceptions, DFW is considered for almost all national corporate relocation searches because of the lack of a corporate income tax, affordable office rents, relatively affordable residential housing, lack of a personal state income tax and other factors, Triolet said.

”The biggest concern has been in regard to potential labor shortages, but this generally is only impactful on certain job roles — usually on either extreme end of the pay spectrum,” he said.

Those include low-paying jobs like call centers, or jobs where advanced scientific or Ph.Ds are required, Triolet said.

“DFW has a large enough labor pool to accommodate most industries and companies, and migration data points to DFW being able to attract whatever talent shortfalls that might emerge,” he said. “People will move for good jobs.”

Amazon sent a letter this month to Dallas and the other 19 finalists to say it’s still weighing its decision. Grubb said the chamber received the letter. He said Amazon has not provided a timetable for its decision other than to say it will announce the winner sometime in 2018.

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